PayPal's State Licenses

In 2006, PayPal was investigated by 28 U.S. States for making misleading and outright false claims to customers. PayPal settled the cases with the individual states. Why? Because contrary to popular belief, PayPal is licensed to operate on a state-by-state basis in the United States.

Each state has the power to shut PayPal down in their state -- or force PayPal to make changes in its business practices or face suspension of operations.

As of July 2, 2007, PayPal is licensed to operate in the European Union as a bank -- with a banking license and full banking privileges.

While PayPal sought -- and received -- banking status in Europe, it resists being called a bank in the United States. Why? If PayPal were licensed as a bank in the United States -- or if the United States Government determined that PayPal was a bank based on the services that they offer -- PayPal would not be able to get away with the improper business practices it engages in today.

An essential tool for anybody with PayPal problems in America is to know that PayPal is licensed to operate in YOUR STATE. Should your state receive enough complaints about PayPal, it could force PayPal into expensive litigation with your state. It could also force PayPal to solve your problem and change its ways or face being shut down in your state.

Since PayPal is a public company (it issues stock), such an action would force PayPal's executives (President, Vice Presidents, Chief Financial Officer, etc) to answer to its stockholders. Their jobs would be in great jeopardy in such a case. Hence, these people would do almost anything to avoid such a situation.

The bottom line is this: complaining to your state's licensing authority will move PayPal to action. For PayPal, it is better to solve your problem than to ignore it and let the complaints pile up. Sooner or later, your state will act. PayPal wants to avoid that.

Following is a list of the U.S. States where PayPal is licensed to operate. Included in this list is the state regulatory agency responsible for keeping PayPal in line and the state statute (law) that applies to Paypal's status as a money transmitter

If your state is NOT on this list, that means PayPal does not have a license to operate in your state or it does not need one.